Gold, yet another record with silver: now investments are driving it

To find an even more impetuous rally, one has to go back to 1979: the year of the Iranian revolution, a source of geopolitical alarm and at the same time the trigger of an oil shock that unleashed galloping inflation throughout most of the world. At the time, the nominal price of gold had almost quadrupled, from around $230 an ounce at the beginning of 1979 to $850 in January 1980, only to reverse to trade at around $300 a little over a year later.

In the 1970s gold outperformed in the 2025s (which, however, has yet to end) partly on the back of the suspension of the Bretton Woods accords, by which US President Richard Nixon ended the convertibility of the dollar into gold in 1971: In the three years that followed, the price of bullion rose by 49%, 73% and 66.1%, recalls Adrian Ash, research director at BullionVault, drawing attention also to silver, whose rally - which started late - has already led to price rises of more than 50% since the beginning of the year.

Demand is not entirely insensitive to price rises. In jewellery, the signs of a slowdown in global consumption are evident, particularly in the case of gold, which recently has broken all price records even in real terms, i.e. adjusted for inflation: that peak of $850 an ounce in January 1980 is now equivalent to $3,590.

Even central bank purchases, while still large, have slowed down. But investors have picked up the baton, and they are now buying in full, especially in the western world (and first and foremost in the US).

Global Etf assets on Friday 17 rose 0.9 per cent in a single day, Bloomberg writes: a jump not seen since the 2022 invasion of Ukraine (and the inflationary tensions caused by the energy crisis).

Since the beginning of the year, these instruments have attracted $25-30 billion in investments and 'sucked in' about 10 per cent of a year's mining output, notes Ole Hansen of Saxo Bank.

By the end of August, according to data compiled by the World Gold Council, there were already some 3,700 tonnes of bullion set aside against Etf: also a record since 2022, which completely cancels out the effect of two consecutive years of predominant redemptions.

Meanwhile, hedge funds have concentrated almost half of their entire commodity exposure in the US markets on gold.